As seen on Shark Tank: This is how to easily lose your money to a crowdfunding fail

There’s a fine line between a crowdfunding fail and a crowdfunding scam. The CoolPeds iBike crowdfunding campaign seems to have ridden fairly close to that line. And although the experienced investors on the ABC hit show “Shark Tank” declined to support Chan’s inventions, several of our readers without that level of business expertise say they got burned.

Now those “investors” want to know if they will ever receive the $500 CoolPeds iBike they believed they were purchasing.

Unfortunately, this situation points to a basic misunderstanding of what crowdfunding is and what it isn’t. If you choose to participate in a crowdfunding campaign, there is no guarantee you will receive anything in the end. And it’s vital to understand that concept before plunking down your cash.

What is crowdfunding anyway?

First things first. In order to understand this case, you need to know the basic premise behind crowdfunding.

Crowdfunding is a relatively new phenomenon in which entrepreneurs ask for backers to fund their ideas. Various crowdfunding platforms such as Indiegogo, Kickstarter and Circle Up host these crowdfunding campaigns. Investors donate money to the idea in hopes that it will come to fruition.

Crowdfunding can be a great way for a struggling innovator to get their product’s creation funded.

However, as one could guess, not all of these crowdfunding campaigns end in a successful product. And in some cases, the contributors lose their money and receive nothing in return. So participating in a crowdfunding campaign is always a bit of a gamble.

The Coolpeds iBike: A crowdfunding fail?

The inventor of this electric bicycle, Tony Chan, collected over $43,000 through his crowdfunding campaign. On paper, that looks like a crowdfunding success. Chan’s backers say it was a crowdfunding fail — for them. Two years later, his investors are still waiting for their $500 iBikes.

We first heard from David Judd, who explained that he had been waiting since 2016 for the delivery of his iBike. Chan told Judd that his iBike had been shipped and then lost during delivery.

“I invested in the Coolpeds iBike campaign in 2016,” recalled Judd. “It’s pretty obvious that Tony Chan is a thief. He received money for an item and has not delivered it.”

And then the next day, we heard from Maggie Janik.

“I purchased the Coolpeds electric bike in September 2017. I never received the bike and the seller doesn’t respond to me,” wrote Janik. “Others have had the same experience. Can you help?”

Unfortunately, Janik’s email suggests that she was unaware of the nature of crowdfunding. She didn’t actually purchase anything — she was, in fact, investing in an idea. An idea that always had the possibility of failing.

Each day, I collected more emails from more of Chan’s crowdfunding investors. The paper trails were all the same. Chan promised the iBikes were on their way.

This crowdfunding fail had impacted Joy Zelmanovich the hardest. She had invested in two of Chan’s elusive electric bikes.

“I was an Indiegogo crowdfunding backer for the Coolpeds Electric bike,” Zelmanovich reported. “I paid for two bikes, each $499 and even though the backers completely funded this campaign, I have not received either bike.”

A failed crowdfunding campaign, but there’s Chan on Shark Tank

Then in February 2018, his benefactors were surprised to see Chan’s appearance on Shark Tank. There, he was asking Mark Cuban and company for $250,000 to fund more of his ideas.

The new inventions that Chan pitched to the Shark Tank experts included an electric scooter/luggage combo and a $9,000 electric car. Chan made no mention of his iBike during the appearance. But his Coolpeds iBike investors were watching. And they were getting angry.

The Shark Tank panel was intrigued by Chan’s ideas, but ultimately they all declined to support Chan and Coolpeds.

I had a lengthy phone call with an Indiegogo spokesperson concerning this specific campaign and crowdfunding in general.

One thing became clear from our conversation: There really is a murky area between a crowdfunding fail and an outright scam. But to a crowdfunding contributor, the result is precisely the same — a financial loss with nothing to show for it.

As a result of the many complaints against Chan and his Coolpeds crowdfunding campaigns, Indiegogo has banned him from future crowdfunding on its platform. The company provided me with this statement after it completed its investigation.

The Indiegogo Trust & Safety team has conducted an investigation and found that the campaign is not complying with the site’s Terms of Use — which require the campaign owner to fulfill the promises they make during their campaigns. The Trust & Safety team has blocked the campaign owner from running future projects on the platform and is sending this campaign to a third-party collections agency in an attempt to recoup backer funds.

As was explained to me by the Indiegogo spokesperson, once the company releases the money in the campaign to the inventor, there is little that Indiegogo can do to retrieve it. And unless there is direct proof of fraud, there is almost nothing that a contributor can do to get their money returned. A crowdfunding fail is not necessarily a scam; it can be merely an unsuccessful idea with no fraud involved. A crowdfunding investor is never guaranteed any return on their contribution to the campaign.

Is the Coolpeds iBike really a failure?

When I read through all the paper trails associated with the various consumers who contacted us, Chan never says his iBike idea failed. In fact, his iBike is available for purchase on the Coolpeds website. So this is where the story becomes more complicated.

If Chan has iBikes to sell and the idea wasn’t a failure, then he should first fulfill the requests for the item from his crowdfunding backers.

As I began writing this cautionary tale, I decided to try to get an explanation directly from Chan.

The consumers who contacted us noted that Chan stopped updating the crowdfunding messages on Indiegogo in January 2018. He also stopped responding to his backers. And when I went to the Coolpeds site, I noted that the “contact us” send button was missing.

Is this crowdfunding fail turning around?

I sent an email to Chan and explained that we would be publishing an article about the many consumers who contacted us about his iBike. Although Chan did not respond to me, I immediately heard from “Ken,” a representative of Coolpeds.

Ken apologized for the over two-year delay in the delivery of the iBike. He said that it had to do with international shipping laws. I explained that none of the consumers contacting us were international customers. But Ken went on as if that made no difference; however, he was happy to announce that:

Hi Michelle,

Thank you for your reply.

We just informed the supporters on Indiegogo that we will ship the bikes to them again or be happy to refund them.

We have delivered successfully on our previous campaigns. And this one was a little surprising to all of us due to the size of the bike to ship internationally. We will resolve the issue asap.

So we are waiting for their replies at the moment. We greatly appreciate your effort.

A surprise Coolpeds update

And surprise! I went back to the Indiegogo website and Chan had added an update — the first one since January 2018.

Tony Chan Campaigner:
Dear Customers, we greatly apologize for late reply. We hope most of the domestic customers who have received the ebikes are enjoying them. We are sorry again that we have not been able to shipped internationally to the 5 or 6 customers outside of the US due to customs and logistics restrictions. Finally, we have finally solved this issue and can deliver to most of the international customers now. We are happy to send the bikes again or refund to customers such as David, Mark, Nathan, etc. Thank you!

And so, it looks like our story has a happy ending for these unsuspecting investors. Most of these contributors only want their money back now, as they have lost all faith in the iBike.

By the way, If you’re in the market for an electric car, Chan is taking $200 “refundable” deposits. And as an added perk, you get a “free Coolpeds iBike” as a bonus… or will you?

Post script

After this story was filed but before it was published, Tony Chan did respond to me. He reiterated the promise to process refunds for each of the five consumers who contacted the Elliott Advocacy team. He also explained that some crowdfunders were located in Hawaii (Judd) and, because of the iBike’s lithium battery, that complicated the shipping. (None of the other consumers who contacted us are located outside of the continental United States.)

Hi Michelle,

Thank you for your efforts. We will process the refunds asap.

Also will you please mention in your article that we have shipped iBikes to most customers already except the few international ones due to customs and logistics restrictions? So it is fair to us. We can send you proof of shipping. This is very important to be a fair platform. I believe we have shipped out about 100 bikes to the campaigns.

And just in case you are cynic — never fear! I will follow up to make sure that those refunds are processed before I officially close this case.

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About the AuthorMichelle is the executive director of Elliott Advocacy.
She is a consumer advocate, writer, SEO-lady, and psychotherapist who spends as much time as possible exploring the world with her family. Contact her at Michelle Couch-Friedman
Read more of Michelle's articles here.

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